Stocks are mostly lower Wednesday as another surge in bond yields caused big declines in technology stocks and the broader market. Investors are cautiously awaiting remarks from Federal Reserve Chair Jerome Powell, who is expected to speak later in the day on inflation and what the central bank may do to combat it.
The S&P 500 index was down 0.4% as of 9:55 a.m. Eastern. The Dow Jones Industrial Average was up 0.2%, helped by bank stocks, while the technology-heavy Nasdaq Composite was down 1%.
Bond yields moved upward again, after being relatively stable for more than a week. The yield on the 10-year U.S. Treasury note was at 1.67% from 1.62% the day before. It’s now at its highest level since January 2020.
Investors are betting big that the economic malaise will dissipate as spring arrives and more Americans get vaccinated against the coronavirus. The $1,400 stimulus checks the Biden administration began sending to individuals last weekend is also helping. But faster economic activity could also translate into some degree of inflation.
Investors are awaiting the Federal Reserve’s economic and interest rate projections, expected later in the day. Economists expect Powell will try to convince jittery financial markets that the central bank can continue providing support without igniting inflation. Those worries have recently pushed bond yields higher.
The Fed meeting “carries the potential to either allay or heighten some of the market’s recent concern with regard to the soaring bond yields,” said Jingyi Pan, senior market strategist at IG in Singapore.
Rising bond yields have hurt mostly high-flying technology stocks, which soared last year and have expensive valuations. Those big tech companies were falling again Wednesday, with Apple down 2%, Tesla down 2.5% and Google’s parent company Alphabet down 1%.
Meanwhile bank stocks continued to climb, as higher interest rates will likely translate into more profits in the future. Bank of America was up 1%, Wells Fargo was up 1.5% and JPMorgan Chase was up 2%.
